Books of account requirement under tax law cannot be replaced by bank records; penalty for non-maintenance sustained.

Bank account entries, a cash flow statement and a revised computation of income do not satisfy the statutory duty to maintain books of account under section 44AA of the Income-tax Act, 1961. Where the assessee's turnover exceeded the relevant threshold and business activity was reflected in the bank transactions, the obligation to keep prescribed books remained unchanged; such records could assist assessment but could not replace books of account. In the absence of a bona fide explanation for non-maintenance, the default under section 44AA was established and penalty under section 271A was sustained.

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Issues: Whether penalty under section 271A of the Income-tax Act, 1961 was leviable for failure to maintain books of account as required under section 44AA of the Income-tax Act, 1961 when the assessee relied on bank entries, cash flow statement, and revised computation of income.

Analysis: The assessee had admitted turnover beyond the statutory threshold and the bank transactions showed business activity exceeding the limit relevant for the accounts-maintenance obligation. The bank account entries and revised computation could assist in assessment, but they did not amount to books of account and could not substitute the statutory requirement to maintain them. In the absence of a bona fide explanation for non-maintenance of books, the default under section 44AA stood established, making the penalty under section 271A sustainable.

Conclusion: The penalty was rightly imposed and the challenge failed.

Final Conclusion: The appeal was dismissed because the assessee was held to have violated the statutory obligation to maintain books of account, and the consequential penalty was upheld.

Ratio Decidendi: Bank account records do not constitute books of account for the purposes of section 44AA, and failure to maintain the prescribed books attracts penalty under section 271A unless a bona fide explanation is shown.

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